1. Field of the Invention
This invention relates to a method for enabling prioritized processing of envelopes potentially containing checks according to indicia of the individual check's clearing organization. More particularly, this invention relates to using intelligence or materials supplied to a drawer of checks to encode indicia of the drawer's checks, the intelligence or materials being designed to accompany the drawer's check and envelope when delivered to the payee, or payee's designated agent, in such a manner that the encoded indicia is readable from the unopened delivered envelope.
2. Description of the Prior Art
There are several potential uses for applicant's invention. Bank Lock Box operations form one particular user group. A Lock Box is a specialized function within a large bank. The bank's Lock Box customers furnish their remittors with addresses that send remittances directly to the Lock Box. The Lock Box becomes the Lock Box customer's designated agent for receiving remittances due the Lock Box customer. The address furnished to the remittor contains a code, such as a box number, identifying the Lock Box customer as the payee. A Lock Box operation typically receives 10,000 to 200,000 payment checks per day. These checks are usually in amounts of $2,000 to $1,000,000.
Sending remittances directly to the Lock Box speeds the collection process on the check and thus moves earlier the time at which the Lock Box customer and/or the depositary bank can begin to draw interest on the remittance amount. "Float", defined as the time between the receipt of the check and the crediting of the amount of the check to the account of the Lock Box customer and/or the bank, is thereby minimized. Minimizing float enhances earnings for the bank and the Lock Box customer.
Credit for the amount of a check is accorded a depositary or collecting bank in the following manner. The depositary or collecting bank periodically forwards "cash letters" to appropriate check clearing organizations. Cash letters present checks (collected at the depositary or collecting bank, payable to customers of the depositary or collecting bank) whose payor banks "clear" through that clearing organization. A clearing organization may be the payor bank itself, a clearing house bank or agent or a member of the Federal Reserve Bank System. Cash letters are typically wired in, followed by a physical presentation of the letter and the checks.
Each clearing organization has one or more daily cash letter "deadlines". Cash letters that reach a clearing organization by one of the daily cash letter deadlines are credited then to the depositary or collecting bank's account. The amount of the cash letter begins to draw interest for that depositary or collecting bank based on the "availability schedule" of each clearing house member bank or payor bank for the specific cash letter deadline.
A depositary or collecting bank may utilize, depending on its level of business, various transportation (and/or possibly communication) means to meet cash letter deadlines. It is not uncommon for messengers daily to hand-carry cash letters with checks via helicopters and commercial airlines to accelerate funds collection to reduce float. The transportation/communications means selected by a bank for meeting various clearing organization daily cash letter deadlines establishes, in turn, its own in-house outgoing deadlines for cash letters destined for those clearing organizations.
It is clearly in the bank's best interest to discover, from the multitude of checks entered into the collection process in the bank, as many as possible of the checks destined to clear at a specific clearing organization by the outgoing deadline established in-house for such organization's cash letter. Such an operational methodology minimizes float.
A Lock Box operation, according to current art, typically handles incoming items in the following manner. Mail is delivered to the Lock Box throughout the day and night, perhaps hourly or half-hourly. Incoming envelopes are sorted according to Lock Box customer based on information encoded in the address (i.e., usually a box number) supplied to the remittor. All of the envelopes sorted by Lock Box customers are then opened, processed and only as the last step, are the enclosed checks sorted according to check clearing organizations.
This final sorting of checks based on clearing organizations is normally performed in a centralized bank service area, frequently called the Transit or clearing operation (Transit). Transit performs this sorting function for those departments at the bank engaged in check funds receipt and forwarding, including the Lock Box. If Transit is utilized for the sort according to check clearing organization, an earlier cut-off deadline for checks out of Lock Box into Transit must be set prior to each outgoing cash letter deadline. According to the number of checks usually presented by the Lock Box to Transit before an outgoing deadline, a Transit processing time is determined. The earlier cut-off deadline for checks out of Lock Box into Transit will be the outgoing deadline from Transit minus the determined Transit processing time. (The determined Transit processing time will also include the time required by Transit to set up, change over software programs and schedule for Lock Box check processing.) The Lock Box operation is constrained to this earlier cut-off deadline as "its" cash letter deadline. Said otherwise, there is insufficient time to process checks from Lock Box to Transit that do not reach Transit by this earlier cut-off deadline. As a result, late arriving checks from Lock Box to Transit can not be processed in time by Transit to be included in the outgoing cash letter.
This earlier cut-off deadline for checks from Lock Box to Transit has an insidious effect. The greater the average number of checks presented by Lock Box to Transit before an outgoing cash letter deadline, the longer the Transit processing time. The longer the Transit processing time, the earlier becomes the cut-off deadline for checks from Lock Box to Transit. The earlier the cut-off deadline for checks from Lock Box to Transit, the greater the number of late arriving checks in Lock Box that become excluded from a particular cash letter.
Bank scheduling factors additionally serve to inhibit the timing of Lock Box check processing in Transit. Bankwise operations place high demands on the services of Transit. Frequently the Transit operation is a bottleneck in bank operations. Each Transit set up to process Lock Box checks involves set up, software program change over and scheduling time. As a result, the Transit operation limits the frequency at which it sets up to process Lock Box checks. Hence, a Lock Box may not present checks to Transit in an almost continuous stream. Therefore, Transit processing time for Lock Box checks prior to an outgoing cash letter cannot be practically reduced by multiplying the number of trips from Lock Box to Transit.
At the time of an outgoing deadline for a cash letter, there will be a backlog of checks that have arrived in Lock Box. The processing of that backlog of checks either has not begun or has not been completed or was completed too late to meet the cut-off deadline from Lock Box to Transit. If 20% of the checks passing through Lock Box clear through the clearing organization whose cash letter deadline has arrived, this backlog of checks should be comprised of checks 20% of which have arrived at Lock Box but have missed the cash letter. Twenty percent of the backlog misses drawing interest for the next interest period. It is also clear in the above hypothetical that 80% of the Lock Box processing time and 80% of the Transit processing time shortly prior to the in-house deadline was wasted on checks not destined to be included in the immediate cash letter.
The waste in the above situation is magnified by the fact that mail does not arrive in Lock Box at a steady rate. Each day has peak mail arrival periods and slow mail arrival periods. Wasted Lock Box processing time and wasted Transit processing time during peak mail arrival periods makes 20% of the backlog a greater absolute number.
One current practice to minimize float in Lock Box operations is to accelerate Lock Box processing in the period just before a critical in-house deadline. The acceleration is achieved by increasing manpower in the Lock Box operation. An intensive manpower solution accelerates processing and minimizes the total backlog of checks in the Lock Box, but the labor is spent indiscriminately. According to the prior hypothetical, 80% of the labor is wasted on checks whose accelerated processing is unnecessary at this time. In the normal case where there is a cut-off deadline for checks from Lock Box to Transit, that deadline must be moved even earlier in time with this intensive manpower solution since the Lock Box is now presenting a greater total number of checks to Transit just prior to a crucial deadline. A greater number of checks requires greater Transit processing time. Again, by the prior hypothetical, 80% of the processing time is not required at this moment.
To summarize, according to the present art, those checks in a Lock Box operation that are to be included in a cash letter are discovered by the last step in creating the cash letter. This last step is a sort of the checks according to check clearing organization. The sort may be performed, and normally is, in a Transit operation. The gross volume of envelopes arriving in Lock Box receives the same indiscriminate detailed processing. As a result, important late arriving checks miss cash letter deadlines. Float is not minimized. Sheer labor intensive accelerated envelope content processing before cash letter deadlines creates labor scheduling problems, and labor is wasted in the detailed processing of envelope contents whose check is not destined for the upcoming cash letter. Time is also wasted in Transit prior to the outgoing cash letter deadline by processing checks that are not destined for the immediate cash letter. Processing a greater volume of checks prior to a cash letter deadline increases Transit processing time which in turn moves the cut-off time for checks from Lock Box into Transit earlier. The result is an increase in float for late arriving checks in Lock Box.
Large retail organizations, or those who process remittances for large retail organizations, form another user group for applicant's invention. Retail organizations typically route all remittances through their own remittance processing operations. Nationwide, checks are generally directed to a few addresses. The retail remittance processing operations open the envelopes and record relevant data before forwarding the checks to one or several major depositary bank(s) for collection. The depositary bank receiving the checks that are not for large amounts individually, although they may be for a large amount in sum, can not accelerate their processing with present means at a competitive per item cost. The checks are sorted by the bank in a non-accelerated manner according to check clearing organizations and make the next available cash letter. Days of float may result within this system. Days of float reduce earnings for the retail organization.
Given the float resulting from present remittance processing operations, in a bank Lock Box or in a large scale remittance processing operation, it is the goal of the present invention to enable check processing operations to reduce float by providing the capacity up front to discover and prioritize incoming mail (i.e. unopened envelopes) according to indications of clearing organizations of likely enclosed checks. The check processing operation can subsequently prioritize the processing of envelope contents in accordance with fluctuations in the rate of mail delivery and in accordance with crucial outgoing communications/transportation deadlines related to the check collection system. The invention permits optimization of the processing of envelope contents so that the time before crucial in-house deadlines is not wasted by processing checks unnecessary for the immediate cash letter. Thereby, the float is reduced, and manpower is economically utilized. Such a process utilized in a Lock Box operation would enable important cut-off deadlines for checks from the Lock Box operation to a Transit operation to be moved closer to the Transit outgoing cash letter deadline, which increases the number of late arriving checks submitted for collection. Only checks destined for the immediate cash letter would be presented to Transit shortly before the crucial outgoing deadline. During periods when the in coming mail volume is high, such a procedure permits Lock Box processing to concentrate only on those envelopes potentially containing checks destined to clear through Transit for the immediate outgoing cash letter. During periods when relatively infrequent and low volumes of mail are received, the processing of all checks in Lock Box can be brought to a current state. Increased Transit processing time during reduced mail volume periods involves minimal waste because there are relatively few checks arriving late in Lock Box. The operation can closely approach the goal of having detected and processed, out of the backlog of all arrived mail, all envelopes potentially containing checks destined for clearing organizations at the time of a clearing organizations outgoing cash letter deadline.
Therefore, it is an object of the present invention to enable prioritized processing of envelopes potentially containing checks by enabling an up front sorting of unopened envelopes according to encoded indicia of the clearing organizations utilized by the payor banks of the potentially enclosed checks. The encoded indicia might be of the payor bank's check clearing organization(s) themselves or of the drawer's geographic location or zip code.
It is a further object of the present invention to enable sorting of unopened envelopes according to encoded indicia of clearing organizations utilized by the payor banks of potentially enclosed checks in the envelopes, by supplying to potential drawers an address, an envelope, intelligence, information or other material which is to be returned, in some fashion, by the drawer with remittances. The address, envelope, intelligence, information or other material encodes the indicia and is readable without opening the envelope.
It is a further object of the present invention to permit sorting of unopened envelopes according to encoded indicia of the clearing organization of payor banks of potentially enclosed checks in an improved manner whereby the information encoded in the address, envelope, intelligence or other material, supplied to the drawer and returned by some fashion with an envelope delivering the check, is updated when processing of the check reveals that the check will clear through a different clearing organization than that used in the past.